Stocks in Shanghai led Asian equities higher after Chinese manufacturing data exceeded estimates. The British pound dropped amid election concerns.
Chinese shares rallied after a two-day holiday, while stocks in Japan pared declines as the yen weakened. The British pound dropped for the first time this week as a poll showed Theresa May’s Conservative Party may miss a majority. Oil extended losses. The yield on 10-year Treasuries edged higher after Tuesday’s declines.
China’s official factory gauge held up, adding to signs the world’s second-largest economy has maintained some of its first-quarter momentum. Data from Japan showed industrial output rebounded in April as overseas demand continued to support the nation’s economic recovery.
While equity benchmarks across the world have posted repeated records this year, potential headwinds to global growth remain. Treasury yields slid Tuesday after Federal Reserve Governor Lael Brainard said soft inflation could cause her to reassess the path forward for monetary policy should it linger. Fed policy makers lifted rates in March and have penciled in two more 2017 rate increases, and investors expect the first of those to come in June.
Elections in the U.K., Germany and Italy are looming as Brexit negotiations begin. The Times of London published a YouGov poll showing that the ruling Conservative may lose 20 seats and their majority in parliament. Meanwhile, U.S. President Donald Trump is ratcheting up a dispute with Germany and battling to implement spending and tax-cut plans. Fed Bank of St. Louis President James Bullard said on Tuesday the Trump administration will need to deliver on the policy expectations that have driven the stock market higher.
Click here to read our Markets Live blog.
Here are some of the key events coming up:
- The euro-area’s preliminary headline inflation rate will come on Wednesday.
- More Fed officials will be speaking as the FOMC’s June 13-14 meeting approaches. Robert Kaplan will be in New York Wednesday.
- The U.S. jobs report Friday may bolster the case for a rate hike, with a gain of 180,000 positions expected.
- Brazil’s central-bank decision on Wednesday will probably see a cut of 75 to 100 basis points from the current 11.25 percent, according to economists.
- The EIA is due to release its monthly supply reports Wednesday.
Here are the main movers in markets:
- The Shanghai Composite Index climbed 1 percent as of 10:58 a.m. in Tokyo. The manufacturing purchasing managers index remained at 51.2 for a second straight month in May, compared with a median estimate of 51 in a Bloomberg survey of economists.
- Hong Kong’s Hang Seng gained 0.4 percent, while the Hang Seng China Enterprises Index added 0.7 percent.
- Japan’s Topix fell 0.2 percent, paring an early loss of as much as 0.4 percent. Australia’s S&P/ASX 200 rose 0.2 percent, while South Korea’s Kospi added 0.4 percent.
- Futures on the S&P 500 rose less than 0.1 percent. The benchmark index slipped 0.1 percent on Tuesday, retreating for the first time in eight days. The Nasdaq 100 Index advanced for an eighth day to an all-time high.
- The Stoxx Europe 600 Index declined a fourth day as data showed euro-area economic confidence fell for the first time this year.
- The pound dropped 0.3 percent to $1.2819. The euro fell 0.1 percent.
- The yen weakened 0.1 percent to 110.95 per dollar after rising 0.4 percent on Tuesday. The South Korean won strengthened 0.2 percent.
- The Bloomberg Dollar Spot Index rose 0.1 percent, after trading little changed in the previous two sessions.
- Gold fell 0.1 percent to $1,261.46 an ounce, adding to a 0.4 percent loss on Tuesday.
- Oil dropped 0.3 percent to $49.50 a barrel after retreating 0.3 percent in the previous session. OPEC and Russia’s deal last week to extend output limits through March was met with a selloff as it didn’t include deeper cuts, a plan for the rest of 2018 or a new ally.
- The yield on 10-year Treasuries rose one basis point to 2.22 percent, after declining four basis points in the previous session.
- Australia 10-year yields fell less than one basis point to 2.39 percent.